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A First-Timer’s Guide to Closing a Real Estate Deal

The following is a guest post. Enjoy! 

Hopefully, you did everything right from the beginning: You were pre-approved by your financial institution for an affordable home loan; you researched your area extensively to find the perfect property for you; you hired a real estate agent you could trust to gain access to property details and help you navigate the complex seas of paperwork. Now, it’s time to close.

Whether you are buying your first family home or a commercial property for your business, closing is convoluted and seemingly interminable. Even with the help of an experienced real estate agent, you should learn about the closing process before you attempt to survive your first real estate deal. This guide will walk you through the most important steps of closing your deal, so you come through excited to finally own your own property.

Obtain Title Insurance

Though it might seem unnecessary, performing a quick title search and obtaining title insurance will safeguard your investment from conflicts down the road. It’s possible that a previous owner of your soon-to-be home left the house in a will to a long-lost relative or failed to pay debts taken against the house. If anyone shows up trying to claim ownership over your home, your title insurance should reimburse you, so you won’t take a significant loss due to the state’s poor record-keeping.

Open Escrow

“I’m in escrow!” is an exciting statement to shout, but before you do, you should know what “escrow” means. Escrow is an account held by a neutral third party to prevent you or the home’s seller from being scammed. Until both parties in the transaction finish the necessary paperwork, all the money involved will be stuck in escrow.

Negotiate Closing Costs

Escrow isn’t free, but odds are you aren’t sure how much it should actually cost. Most escrow companies will try to take advantage of your ignorance and inflate their fees unnecessarily. By displaying your knowledge of the system (and using a few smart negotiating tactics), you can lower your closing costs and save some money. So-called junk fees to watch out for include:

• Administrative fees
• Application review fees
• Appraisal review fees
• Ancillary fees
• Email fees
• Processing fees
• Settlement fees

Complete a Home Inspection

Do you know the difference between a wall crack caused by foundation settling and one caused by water damage? Can you tell just by looking how old the pipes are in the master bathroom? Can you recognize black mold? Most likely, the answer to all these questions ― and any questions about home repair or construction ― is “no.” That’s why you need to hire a home inspector to survey your desired property before you close the sale: You should know exactly what you’re in for before laying down cash.

You should also consider hiring a pest inspector to look for signs of damage due to wood-eating insects. If an infestation is discovered, most mortgage companies require the seller to resolve the issue before closing.

Renegotiate

Based on what your home and pest inspectors find, you might be able to lower the price you previously agreed to. Because you will likely need to complete some amount of repairs, you should ask that the seller to lower the cost by at least as much as the cost of the repairs ― or else request they complete the repairs themselves.

Set Your Rates

If you didn’t seek pre-approval ― which you should have, by the way ― it is time to lock down your interest rate. The best lenders will watch the market for a dip in rates, but you should avoid becoming too obsessed with obtaining the lowest possible number. Interest rates fluctuate several times every day, so your goal should be to obtain a reasonable rate that you can afford.

Funding Escrow

Finally, you can enter escrow. When you signed your purchase agreement, you likely deposited some earnest money into your escrow account to convince the seller that you do intend to buy the house. By now, both parties are certain about each other’s intentions, and it is time for you to move a more significant amount of money into your escrow account. You should deposit the full amount of your down payment (less the earnest money) and closing costs.

Sign the Papers

The last step of closing on your deal is signing the paperwork. In total, there should be about 100 pages worth of material, detailing the agreements of the sale, and you should read absolutely all of it. Because a home purchase will impact your finances for decades, you must know for certain that the contract says what it is supposed to. You don’t want any surprises in the way of rising interest rates or unknown fees down the road.

5 Money-Saving Hacks for Your Student Loans

The following is a guest post. Enjoy! 

Taking out student loans can provide you with the opportunity to earn a degree, learn a trade, and improve job prospects. In other words, the benefits you’ll gain in the long run make borrowing well worthwhile.

What’s even better is that there are myriad ways to save money when you take out student loans, as well as when you start to pay them back. Here are some money-saving hacks every student should know about.

1. Be frugal

It’s always best to borrow as little money as possible. There’s no shame in taking advantage of any student loan funds you’re eligible for, but the less you borrow, the less you have to repay down the road. Sure, it’s tempting to use your extra funds for a spring break vacation, but remember you’ll have to pay interest on that trip later on.

2. Refi high-interest loans

When you apply for and accept student loans to pay for college, you may end up with a combination of both federal and private loans at a variety of interest rates. If you can, it’s best to pay off the high-interest loans first to avoid extra expense.

However, you might also consider refinancing your student loans. You just have to make sure it makes sense to do so. This means crunching numbers to see whether or not the savings you’ll enjoy are worth the expense of refinancing.

3. Automatic payments

Many lenders offer incentives to borrowers that set up an automated payment schedule and allow funds to be automatically withdrawn from their bank account each month (or more frequently). To find out if you’re eligible for any discounts associated with automatic payments, simply check in with your loan service. Then there are companies like Ameritech Financial that help you to lower and refinance your student loan debt which is gaining a lot of popularity with recent college graduates.

4. Paying on principle

There’s absolutely nothing wrong with paying the minimum on your loan payments every month. This is the required amount to avoid delinquency and paying it diligently is essential to improving your credit rating.

You may not realize, however, that you can also apply additional funds to the principle owed in order to reduce debt faster and shave some money off your interest payments over time. You just have to make sure to note that any extra you pay should go toward the principle so that it isn’t mistakenly applied to your next payment due (including interest).

5. Taking advantage of applicable benefits

You may be able to take advantage of tax deductions based on your interest payments on student loans, so you should definitely discuss the prospect with your tax advisor or contact the IRS to ask if you are eligible.

You might also qualify for federal or state repayment forgiveness programs, depending on your major and where you live. In addition, many companies offer some form of education reimbursement as part of a benefits package. You may be surprised by the benefits available to you through government programs and employment opportunities, and all you have to do is look for them.

5 Unexpected Benefits of Earning a Finance Degree

The following is a guest post. Enjoy! 

For most people who choose to study finance, their reasons are simple: They enjoy working with numbers, and there is significant earnings potential in the world of finance, making it a very attractive option for those who want to bring home a decent salary.

However, in addition to those benefits, there are others that you might not expect when you earn a master’s degree in finance. As it turns out, a healthy salary is only the tip of the iceberg when it comes to careers in finance, and most find that their investment in advanced education pays off in several ways.

1. A Wide Range of Career Options

The term “finance” is an umbrella covering a range of diverse career options. You can opt to work in personal financial services, which might mean working in insurance, real estate, or financial planning. You may opt to go into a financial analyst role, working as an underwriter or a manager for a business, or even work as a budget analyst, helping either the government or private enterprise develop and maintain workable budgets. Finance also encompasses investment banking, accounting, economics, and even entrepreneurship, but the bottom line is that nearly every industry and every business (and most individuals) has a need for a financial expert on staff, creating a diversity of opportunity for anyone with a finance degree.

2. Improved Personal Money Management

It only makes sense that after spending several years studying the principles of financial management and how the economy and markets work, you will have a better understanding of how to effectively manage your own money. While a finance degree is by no means a requirement to becoming financially sound, it certainly helps. You can put your knowledge to good use creating a personal financial plan and making good decisions to ensure that you have enough money both now and into the future.

3. The Chance to Help People

In some cases, financial professionals don’t always have the best reputation. However, getting a degree in finance actually opens up a number of opportunities for you to help others and make a difference in their lives. Whether you are a Realtor helping a young family purchase their first home, a financial planner working with older adults to ensure that they have all of the resources they need to retire comfortably or a financial analyst with a major corporation identifying potential cost savings that can be passed on to customers, your skills can be used to help the greater good. Your degree will give you the knowledge that can ensure financial security for others, and that is a major benefit for many.

4. Extensive Opportunities for Growth

It’s not difficult to move up the ladder in a finance career. Not only does the U.S. Bureau of Labor Statistics predict that the number of new job opportunities in the financial industry will increase by as much as 32 percent between now and 2024, there is also a great deal of potential for those working in the industry to move forward. If you do not already have a graduate degree in finance, earning one can make you eligible for new positions, as well as for advanced certifications, charters, and other distinguished designations, which can help you move into higher positions and earn more money.

5. The Ability to Stand Apart From Others

Earning an advanced degree is a powerful way to set yourself apart from the competition. Not only do you gain advanced knowledge and build your skills, going back to school and committing yourself to the investment of time and money to earn the degree tells employers and clients that you are serious and committed to the field. In fact, one of the most sought-after qualities among financial services firms is a willingness to continue learning and growing. While a master’s degree isn’t the end of the road in terms of your education, the fact that you put the effort into the degree is strong evidence that you want to be the best you can possibly be in your work.

The personal benefits of earning a degree in finance — or any subject, really — go well beyond the few listed here. The sense of achievement and pride in your accomplishment cannot be understated. However, if you are considering whether to go back to school or not, keep these benefits in mind and remember that it is about much more than the money.

From Renter to Buyer: Top Tips for Making a Smooth Adjustment to Homeownership

The following is a guest post by Amy. Enjoy! 

It’s great to enjoy the element of flexibility that renting offers you but nothing really beats living in a place that you can truly call home.

Looking for a home to buy is the first step on your path to making that transition from renter to buyer. Here are some tips and suggestions on how to achieve a smooth adjustment to homeownership.

The financial difference is one of many advantages

Renting can often feel like you are wasting money that could be going towards a property that you get to own outright when you have paid off the mortgage, and according to a recent survey by high street bank Barclays, the savings could run into hundreds of thousands.

The bank estimated that if you compared the cost of owning your own home over a fifty-year period, against the cost of renting, with aspects like maintenance in the equation, you would be over £190,000 better off as an owner.

Renting might win the short-term financial argument in some respects but as you will always need a roof over your head and it is, therefore, better to take a longer-term view, being a homeowner seems to be a bit of a financial no-brainer.

A greater sense of security

If you needed any further persuasion regarding the argument in favor of buying rather than renting, another positive factor is the greater sense of security that you may experience.

It is not just a case of putting down roots and being able to make plans knowing that the house is yours as long as you keep up the mortgage payments, it is also the progression in your credit standing from tenant to homeowner.

This is certainly one factor that sometimes gets overlooked but definitely has relevance.

Owning your own home can improve your credit standing and when you have a property with equity available, this can give you an element of bargaining power for better deals and lines of credit, that is not always available if you are a renter.

Experiencing the difference

Becoming a homeowner can take a bit of getting used to, as some things change the minute your name goes on the title deeds and you officially become a property owner.

One aspect of this transition that can be a bit challenging to adjust to is the fact that if anything goes wrong with an appliance in the property or any repairs or maintenance tasks are required, it is no longer a case of calling the landlord or the letting agent in order to get it done.

You will have to pick up the bill for any of these expenses, so be prepared to think like a homeowner and anticipate any potential problems by scheduling regular maintenance. Also think about setting up an emergency fund that gives you access to some money in a hurry, if you need to get the boiler repaired or an electrical fault needs fixing urgently.

There are a number of fundamental and sometimes subtle differences between being a tenant and owning your own home, so it is simply a case of being prepared for these changes and understanding how your role has changed.

Get your insurance sorted

Another noticeable aspect of becoming a homeowner is the difference it makes to your insurance requirements.

As a tenant, you will presumably have arranged insurance to cover the prospect of your personal belongings being damaged or stolen in the property that you are renting.

When you become the owner of a property, you immediately become responsible for insuring the building itself as well as your possessions. Buildings insurance is designed to insure against potential problems with the building, structural or otherwise, that will need to be paid for.

If you have a mortgage, your lender will insist that you have a valid building insurance policy which covers the rebuild cost of the property should disaster strike. For a personal perspective, buildings insurance will also mean that you take out cover so that if your home is flooded by a burst pipe, for instance, the insurance cover will allow you to be able to claim for the majority of any expenses incurred in putting this right.

Buildings insurance can often be combined with a contents policy so that you are covered for most eventualities.

Once you get to know all of the main aspects of homeownership and the differences you face compared to renting, it shouldn’t take you long to make a reasonably smooth transition.

To Rent or Buy: Knowing the Right Housing Choice for Your Wallet

The following is a guest post by Melissa. Enjoy!

For people in the UK who are trying to make sense of the property market and their options, it can feel rather like a game of pontoon, and you don’t whether to stick or twist, in terms of renting or trying to buy your own home.

There are some attractive properties to discover in certain areas around the country, it could work out cheaper to buy than to rent.

The buying or renting conundrum

If you were looking at a map of the UK where rents and property prices are at their highest level, the very epicenter of the most expensive area would be central London, where property prices and some rents, look more like mobile numbers rather than an asking price.

Interestingly, as you work your way out of that price hotspot in the city of London and spread out to other cities across the country, the numbers become not just infinitely more manageable in terms of affordability, but overall, in just about 35% of the rest of the UK, the mathematics come down in favour of buying rather than renting.

As you would expect, buying in some cities such as Glasgow and Dundee in Scotland can offer some clear blue water in terms of a definite monthly saving achieved through buying rather than renting a property in these areas.

However, there are also a number of cities like Manchester and parts of Liverpool for example, where your mortgage payments will still be cheaper than many rental payments for an equivalent property.

It is still probably cheaper to rent than to buy in locations like London and Cambridge as prime examples, but as a general view, the further north you head in the UK, the greater the chance than buying will trump renting in terms of monthly cost savings.

Savings to be made despite rising house prices

The property website Zoopla came up with some figures recently which seem to convincingly support the argument that buying a home is cheaper than renting in many major cities throughout the UK.

The study concluded that nearly half of the major cities offer you the chance to make savings through buying rather than renting. Interestingly, buying instead of renting was cheaper in 36% less than a year ago, but that figure has since risen to 48%, suggesting that there a growing number of opportunities to save money each month if you can get yourself on the housing ladder.

Barriers to overcome

It is fair to say that actually buying your own home is not always that easy in comparison to renting, as there are barriers to overcome, such as raising a big enough deposit and being able to afford the additional expenses associated with moving such as stamp duty and legal fees.

The average house price in the south of the country is now well over £300,000, which means that raising a deposit and having enough income to pass the affordability check, could be an issue.

If you widen your property search to the midlands and the north, the UK housing market offers far more opportunities in terms of affordability, as the average house price is closer to £150,000, giving a clear example of what is meant when people talk about the perceived north-south divide.

How the numbers work

Working on the basis that you are able to raise a 10% deposit in order to buy your own home, which is the typical percentage required, you will put yourself in a position to make savings over the term of your mortgage, in comparison to what you would spend on rental payments.

A typical mortgage where you put down a 10% deposit and pay the mortgage back over a period of 25 years at a fixed interest rate of around 4.5%, should see you end up paying less to own your home than renting.

The other major factor to consider is that once you have paid off your mortgage, you will own your home outright and be able to profit from any subsequent rise in values over the time that you have owned it.

There are pros and cons to both options, as you might have more flexibility to move around more easily when you are renting for example, but if you do want to make the most of the money that you have available each month, it could turn out to be cheaper to buy than to rent, especially if you are casting your net well away from the London area.

Personal Finance Statistics: How Do You Stack Up Against the Rest of America?

The following is a guest post. Enjoy! 

Managing your personal finances day-to-day has become routine, but many do not know how they stand against the rest of America. Are you better off than the rest or are you spending more than most of the country? Here are some statistics to help you determine if it is time to rethink your finances.

Finances and Credit Scores:

• 76% of America lives paycheck to paycheck.
• 77 million Americans have debt that averages to about $5,200 per person.
• A 700 score is considered a good credit score and the average credit score is 692.
• In 2015, between business and non-business, 911,086 Americans filed for bankruptcies. This is the lowest it has been in the past four years.
• 25% of middle-class households have less than three months savings.
• When using credit cards, Americans spend 12-18% more.
• In 2014, 48% used credit cards to pay for online purchases, while 30% use a debit card.
• Only 30% of Americans plan long-term savings and financial plans.

Ethnicity:

• Two in three households of color do not have three months of savings accrued.
• The home ownership rate for white households is 72% while the ownership for households of color is 46%.
• African-American households have interest rates at least 2% higher than that of white households.
• 50% of white households and 71% of African-American households have received calls from debt collectors.

Retirement and Gender Differences: 

• When it comes to knowing financial literacy (knowing how money works in the world, how to invest money and manage money, and how to earn money) women consistently score lower than men.

• There are no differences between men and women who have strong financial literacy.
• 50% of working Americans have less than $2000 saved for retirement.
• 24% of Americans have postponed their retirement at least once during the past year.
• 17% of retirees report that their current level of debt is higher than it was five years ago.
• 50% of today’s American families are at risk of not being able to maintain the standard of living once they retire.

What Are The Benefits of a CEO Succession Plan?

When it comes to business, patience isn’t much of a virtue anymore. Companies are looking for rapid growth and success. More pressure is put upon employees and leadership to perform and produce at a high level immediately. Although expectations can be quixotic at times, that’s the world we live in. This concept is especially true for CEO’s with CEO departures numbers increasing dramatically over the past two years. In January, CEO departure increases reached a new peak with 131 CEOs departing their company, according to Challenger, Gray & Christmas Inc.

Some companies do require a change of leadership and others may be pulling the trigger too quickly, but no matter the reason, every company needs to have a CEO succession plan in place.

Why Disability Insurance Now?

The following is a post by Laura Hahn. Enjoy! 

None of us plan on becoming disabled, but the sobering reality is that nearly one in four Americans will become disabled before they retire. Most disabilities are not caused by accidents but by muscle, bone, and joint disorders, as well as cancer, heart disease, diabetes and other illnesses. And that’s precisely why individual disability insurance is an integral part of a comprehensive financial safety net, especially for people who are in their peak earning years and who might not be able to afford the financial impact of a serious disability.

Disability insurance helps replace income lost due to illness or injury, and buying disability insurance while young and healthy means the cost is less expensive than purchasing when older – much lower than what people believe. The cost goes up almost 40 percent when a 30-year-old waits until age 40 to buy disability insurance. Purchasing disability insurance young lets you lock in your costs so rates can’t be increased, and groups like students and medical residents may qualify for a discount.

In the Worker Disability Planning and Preparedness Study conducted by the Council for Disability Awareness, nearly nine in ten workers (86 percent) surveyed believe people should plan in their 20s or 30s in case an income-limiting disability should occur, however only half (50 percent) of all workers have actually planned for this possibility and fewer than half (46 percent) have even discussed disability planning. So why don’t they? Common beliefs that keep people from purchasing disability insurance:

• “I’m healthy, it can wait.”
• “No way I’d ever be unable to work.”
• “No rush, it’ll cost the same whenever.”
• “I have too many expenses already.”
• “I can depend on Social Security disability benefits.”

According to the Council for Disability Awareness (CDA) and the Social Security Administration, the occurrence of disability among young adults is high. They say one in four 20-year-olds will become disabled at some point before they retire. Average disability claims last from 31.6 to 34.6 months (nearly three years) and one in eight workers will be disabled for five years or more during their working careers.

A 2013 study by the National Research Council and Institute of Medicine (NAC/IOM) showed, not just that Americans are getting sicker, but that young Americans are getting sicker. For example, the overall rate of stroke is increasing for young and middle-aged people, those between 20 and 54 years of age. A study published in the Journal of Neurology looked at stroke trends in the Greater Cincinnati area between 1999 and 2005. It found that the rate of stroke in the 20-to-54 age range increased from about 13 percent to 19 percent.

For those in their 20s, about one-fifth of disabilities are caused by accidents. For people during their prime working years, 90 percent of disabilities are caused by illness or disease. Most disability claims fall into certain top areas, leading with musculoskeletal/connective tissue disorders, such as back and neck pain, joint, muscle and tendon disorders, or foot, ankle and hand disorders. Closely following is cancer, mental disorders such as depression and stress, and cardiovascular and circulatory disorders.

We’ve seen the stories of famous people who’ve had their careers derailed early due to disabilities caused by unexpected illnesses or accidents—but there are countless stories of average 20- and 30-somethings who are not famous, but suffered because they did not have the disability insurance that could have protected them financially.

Young adults in their 20s and 30s may be surprised how affordable disability insurance is when purchased early. Some insurance carriers even offer no-obligation online quotes.

The CDA notes that less than five percent of disabling accidents and illnesses are work-related, meaning it’s likely a disabling factor is something that could happen outside of work and it’s likely to be something unpredictable. Purchasing disability insurance when you’re young and healthy means costs are low and locked in, and you’re protected before anything urgent, such as a diagnosis, can have significant consequences—something 25 percent of workers will experience in their lifetimes.

Disability insurance can help reduce financial stress at a time in their lives when it’s really important—and it’s something that’s better to obtain as a young adult.

Make Money Online and Have More Time for Work that Matters to You

The following is a guest post. Enjoy!

The notion of the 20th century career is getting left in the dust. It used to be that, in order to make money reliably and to retire well, you had to report into a workplace every single day, for most of the rest of your life. This is because the workplace was owned by someone with money, who created a product or service which was used by enough people that their payments were sufficient to make that individual or individuals very rich, with money left over to pay a stable of workers such as yourself.

But this put people in an awkward and increasingly dissatisfying position. Karl Marx, the great economic philosopher, described the inherent need for human beings to work, and to see the best aspects of themselves in the work they did. For instance, let’s say you were a carpenter who built tables. Your work would be most satisfactory, said Marx, if you built tables which were strong, reliable, sturdy, and attractive. These qualities were valuable to you, the producer, because they represented your own best qualities, aspects of yourself that you strove to exhibit at all times and in all places.

But the problem with capitalism, said Marx, is that it tends to push the worker away from his or her meaningful work. If you were a great table builder, as you would become if you were able to successfully put those great qualities into the tables you built, you would be likely to sell lots of tables. Suddenly you’d have a waiting list. You’d have to hire employees to keep up with demand, maybe even build a factory. Suddenly, you are spending more of your time working as an administrator, trying to streamline the production of your tables to maximize the output demanded of you by the market, and by your growing overhead costs and payroll. What happened to the satisfaction you used to receive from making a great table?

In the 20th century, this process went into overdrive. The innovators became the richest people on the planet, and their underlings, the hundreds of thousands of workers they employed, were no closer to doing hard work producing products which represented their values than the bosses were. Today, many workers don’t need to work for a centralized corporation in order to make satisfactory wages, freeing them to find ways of making meaningful products (whatever those are) of their own, a process no longer directly related to survival.

If you have broken out of the 20th century career mold, what you do with your spare time is up to you. But how you make your money, through methods available online, is open to discussion. Freelance writing and design and other work, selling stuff you make or already own, creating content which you can monetize through Youtube or other methods, the list could go on and on. If you learn methods employed by bloggers, internet creatives, and web investors, it’s likely that your income could be totally replaced, setting you free from a time-sucking 20th century career and opening you up to a new way of life in the 21st century.

What Do Recent House Price Trends Mean for People Trying to Sell Their Home?

The following is a guest post. Enjoy! 

The housing market has been booming throughout 2015 and into 2016 that looks set to continue. House prices have steadily increased for the past ten years and as we start the New Year, there are no signs of the market slowing down. But, as someone looking to sell their home, what do these trends mean for you?

What are the recent trends?

The steady increase means that it’s more than likely that your home will increase in value throughout the coming year. A report published by the National Association of Estate Agents suggested that the increase is set to continue for at least another 10 years. Although, there is nothing set in stone to confirm this, if we look back at the property market over the past decade it looks pretty similar. With no huge economic changes on the horizon, low wage inflation and tighter lending restrictions, house prices soaring seems like it will be an accurate prediction. With such a huge demand for housing at the minute and so many young people desperate to get on the property ladder it is a good time to sell your home if you’re in a financial position to sell.

Why is this?

The increasing rise and rise of house prices is a result of the high demand for homes in the UK and lack of affordable housing. The government are trying to combat this by introducing higher taxes for buy to let landlords with the increase in stamp duty charges set to be introduced in 2016 and the help to buy ISAs for first time buyers.

So what does this mean for me?

As a homeowner looking to sell your house, it puts you in an enviable position. If you are wanting to move as soon as possible, it’s probably the best time to buy a new home as the new home you choose to buy will be at a lower price now than in say a few years. If you’re looking to upgrade and move to a bigger house now is definitely the time as larger houses will obviously become more expensive.

However, if you’re considering moving house but not desperate to move in the immediate future, it may well be worth hanging on for a few years to see if your home increases in value anymore. This is especially important if you’re planning on downsizing as you will probably make more of a profit on your home by waiting it out for a few years. If you have a property in a very desirable area such as London, holding on to your house for as long as possible is advised as it may double in value over the next ten years.

Therefore, it’s a good time to think about selling your home all round. Whether you’re in a position to hang on and see prices increase even further or need to sell up as soon as possible, making any move in a housing boom is definitely a safe option, you just might make a little more money by waiting a few extra years.